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C3: INSURANCE

3.1 Risk and protection from Insurance

Life is full of unexpected events. Good 😄 and bad

😔 things happened without us knowing it would
happen. In other words, life is full of risks.

In insurance terms, the risk is the chance something

harmful or unexpected could happen. This might
involve the loss, theft, or damage to valuable
property and belongings, or it may involve someone
being injured. Hence, the question is, can we feel
much safer in our lives? Well, yes, and that’s when
insurance comes into the picture.

What is insurance you say? Insurance is a contract,

represented by a policy, in which an individual or
entity receives financial protection or reimbursement
against losses from an insurance company.
Confused? Well, in other words, you buy health
insurance (e.g. monthly payment of RM200, and IF
you got into an accident (touch wood), your
insurance company will pay for your health bill,
depending on the package you bought.**

**This is just for explanation purposes only.

Insurance comes in all sorts of prices and packages,
please consult a professional to advise on different
insurance policies.

The importance of insurance is for reducing the

financial burden when the occurrence of loss or
accident. Insurance also helps give peace of your
mind, not to worry about money if unexpected bad
things happen.

Picture source: https://www.iedunote.com/

⭐ What is an insurance premium?

When you have an insurance policy, the company
charges you money in exchange for that coverage.
That cost is known as the insurance premium.
Depending on the insurance policy, you might pay
the premium each month or on a semi-annual basis.
In some cases, you might be required to pay the full
amount upfront, before coverage starts.

So..how does an insurance company calculate your

insurance premium?

Here are some of the factors affecting the price of

the premium:
- Age
- Range of coverage
- Amount of coverage
- Personal information

E.g. An elderly person is charged more for an

insurance premium due to higher risks of getting sick
compare to a young adult. OR An insurance
premium for a factory is way higher compared to the
insurance premium for a house due to bigger space.

People who work on what premium price to sell in

an insurance company are called actuaries. They
studied actuarial science and is required to pass a
handful or more professional examinations to be
qualified as an actuary. Ps. It’s a very rewarding
career but requires a lot of sacrifices. like...A LOT. 😓
1.2 Deductible and Co-insurance

Picture source: https://www.ehealthinsurance.com/

Picture source: https://www.ehealthinsurance.com/

END OF CHAPTER 3